Sinopec to resume crude supply to three Shandong refineries

27 November 2013 08:46[Source: ICIS news]

SINGAPORE (ICIS)--Sinopec is expected to resume pipeline transmission of crude to three of its refineries in Shandong this week after finishing safety checks on pipelines, company sources said on Wednesday.

The giant on 25 November made an emergent order to conduct immediate checks on all pipelines under operation, in view of the serious oil leakage from its Dongying-Huangdao oil pipeline on 22 November.

The oil spill led to a deadly rainwater pipe blast in Qingdao city, in which 55 people were killed.

"The pipelines delivering oil to Sinopec Qilu, Sinopec Qingdao Petrochemical and Sinopec Qingdao Refining are different ones from the Dongying-Huangdao pipeline and have been proven to be safe, therefore, their oil supply will resume soon," several company sources said.

According to those sources, oil supply to the 100,000 bbl/day refinery under Qingdao Petrochemical and the 200,000 bbl/day refinery under Qingdao Refining are expected to be resumed on 27 November.

Crude delivery to Sinopec Qilu, which operates a 280,000 bbl/day refinery, may be resumed on Friday, added the sources.

Utilisation of the above three refineries will be ramped up following the resumption of oil supply.

Sinopec previously reduced the operation rates of five refineries, including four in Shandong and one in Henan, by 10-30% following the incident.

The two other 160,000 bbl/day refineries that were affected by the incident, one under Sinopec Jinan in Shandong and another under Sinopec Luoyang in Henan, may have to further lower their operation rates since they are directly supplied by the Dongying-Huangdao pipeline, which is now shut with no definite resumption schedule as yet.

Sinopec Luoyang’s refinery utilisation was further cut by 5.6% on Tuesday from Monday, while Sinopec Jinan was said that it had already shut one of its two crude distillation units (CDU).

"If oil supply can’t resume within two weeks, the Luoyang refinery may run out of crude inventories and have to shut down completely," said one source.